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How To Do Variable Universal Life Investments

May 21, 2008
If you are the type of investor who is conservative with the risks they take, you will want to take a look at the VUL, or Variable Universal Life. While 401Ks and mutual funds are well known to the general public, few people have heard of this powerful investment tool. It has a number of powerful advantages that will allow you to earn a great deal of money on your investment with a minimal amount of risk. The VUL is a policy that gives universal life insurance that is flexible and variable. It is very popular because it allows the investors to invest and change their insurance coverage without a whole lot of effort.

When you set up this insurance policy, you will be given the ability to decide the frequency of your payments, as well as the amounts you want to spend. While there will be limits, this insurance policy is much more flexible than other types of investments. Investors will also be given the ability to make payments in lump sums. Once you have a cash value that has accrued, you can apply this towards the premium payments. Perhaps one of the best advantages is that the VUL is not an investment. This means that it cannot be easily taxed by the IRS.

In the 1980s, insurance companies decided to create a new type of product that would give their clients life insurance coverage while allowing them to earn interest simultaneously. The two products that resulted from this were the VUL and EIUL. At the time, extremely wealthy people would put millions of dollars into the accounts, hoping it would not be taxed by the IRS. Unfortunately, the IRS caught on, and they placed limits on how much could be placed in the policies within a given period of time. In most cases, investors may not be able to put in more than $13,000 per year. Despite this, there are some risks to this investment.

The policy will give you the ability to reduce your death benefit in anyway you wish. In order for this to happen, you must show that you are in excellent health. Even then, it is possible that you may have to pay surrender fees. The death benefit can be broken down into two types, and this is the face value of the policy and the variable death benefit. The good thing about the VUL is that you will be allowed to invest in the portfolio of your choice. Whether you're moderate, aggressive, or conservative, their are portfolios that will all meet your particular style. Perhaps the best thing about it is a fixed interest that is guaranteed.

Both the death benefit and cash value will be dependent on how your portfolio performs. It is possible that the portfolio can give you returns that are positive or negative. The insurers will not guarantee you the value of cash you'll have. However, the flexibility of the VUL is an investment that will allow many people to retire in comfort.
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